What is wrong with hyper inflation?

I feel the OP is right. I think the critics here are confusing the devastation caused by massive hyper-inflation on 3rd world countries and fear the same on the USA. thus they attack the OP like children in a playground. Honestly, why attack a poster who has an opposing view. Is your EGO so large that only your view deserves posting?

I am not so sure that hyperinflation in an economic powerhouse such as the USA is the same as it is for smaller economies. Yes, those with the most and best assets benefit from inflation, they always have and always will. therefore, i rush to aquire more assets. JMHO!

KNOW IT ALLS FROM ET......I now order you now.....ATTACK and FLAME AWAY! No need to have a mature debate!
Those with a different view will refrain from posting on YOUR board. What was once a great board now has gone to the dogs. That's why many of quality hardly post here anymore, shame on the FLAMERS!
 
Quote from freewilly:

DO not get scared to death when you hear the word "hyperinflation". I am asking a serious question, what is so wrong with that?

I was from China, and my parents still live there. The inflation in China from 1980 to now is at least 30X, yes, 3000%. I know that based on my first hand experience. It does not take a Economic Nobel prize winner to figure that out. I knew the prices back then, and I know the prices now. China just keeps printing, without telling anyone in the world. I can't say China living standard has gone downhill since 1980s. On the contrary, it is at least 10 times better now.

Now, let's come back the US. If you compare 1930 and now, the inflation is at least 3000%. Do you like the life back then, few people had cars, not many roads available, no TV, no phone, no advanced medicine, etc... or you like the life now? I would easily choose now.

Now if we fast forward the whole thing, if we have 200% inflation in next 5 years, what's so wrong with that? Yes, the price will be 200% more, but your income will also be 200% more.

The only problem I see is "old money" will be devalued. Well, in China, most retired people worked for the government, so they have pension, and their pension is inflation adjusted. For instance, my parents retired as university professors. Their salary was around $200 a month 10 years ago. Now their pension is about $1500(I am only use US dollar here) a month. Their house was free to them, and the medical is paid 100% by the government.

Now, in the US, if social security is inflation adjusted, I think there is no harm to "old money" or old people. If they have 401K, I believe their investment would appreciate if hyperinflation comes.

Yes, the US made serious mistake during Greenspan's term. The money got so cheap back then. It was a huge housing bubble. You can let the bubble burst and everybody suffers, or you can bubble up everything else, then nothing is bubble anymore.

Seriously, I don't like inflation, but at this point, looks like the FED is running out options. Just inflate the hell of it. Put 100 Trillion in the market if we have to. The gas price may be $50/ gallon, but your salary will also be $1M/year. Then there won't be any foreclosure problem. Anyone can easily pay off their house.

Basically what i am saying is the US made a huge mistake, let's just redo it from scratch. Let's wipe out "old money" and "old debt" by inject trillions of dollars.

BTW, I am doing very well. I am still young, and I can easily pay off my house now. I have some "old money", but i am ok with hyperinflation.
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You are apparently a dumb kid with loaded cash from newly rich Chinese parents. Chinese are known for their smarts, you are an exception. Stop embarrassing yourself.
3000% will make any economy complete halt, no body is selling anything. Why would you sell your stuff of any value in the morning if you can wait for 10% higher price in the afternoon?
 
This is a dangerous assumption. Wages have not kept up with inflation in the US and I suspect if we kick into a hyper-inflationary environment wages will not keep up with the rate of hyper-inflation. Even the FED is concerned about the rate of inflation to ensure it doesn't hit an extreme level. If it ever happened in the US it would destroy the economy.

Quote from freewilly:

Now if we fast forward the whole thing, if we have 200% inflation in next 5 years, what's so wrong with that? Yes, the price will be 200% more, but your income will also be 200% more.

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Quote from devilwing:

Well, 3000% in almost 30 years is definitely not a HYPER INFLATION...
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Hyperinflation according to CFA definitions is any 25% absolute rise in CPI over less than 3 years.

3000% is (1+30)^(1/30)-1=.12127=12.127% Since each year is 12.127% (1+.12127)*(1+.12127)=1.12127^2-1=25.726%.

Adding the final year or (1+.12127)^3-1=40.972%.

This <b>is a hyperinlfationary environment.</b>

I don't believe that hyperinflation is happening in the US ex-food and energy. Adding food and energy is close, but still not at that level.

Quote from adadadog:

You are apparently a dumb kid with loaded cash from newly rich Chinese parents. Chinese are known for their smarts, you are an exception. Stop embarrassing yourself.
3000% will make any economy complete halt, no body is selling anything. Why would you sell your stuff of any value in the morning if you can wait for 10% higher price in the afternoon?
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Hyperinflation takes longer than that, adadadog.
 
Not sure I'm following your math. Isn't it a simple calculation as:

(1.3059)^30 = 3001.22, or 30.59% annualized compounded rate kicks 1 buck up to $3,001.22 bucks over 30 years? Still hyper-inflationary per your cite.

Quote from bwolinsky:

Hyperinflation according to CFA definitions is any 25% absolute rise in CPI over less than 3 years.

3000% is (1+30)^(1/30)-1=.12127=12.127% Since each year is 12.127% (1+.12127)*(1+.12127)=1.12127^2-1=25.726%.

Adding the final year or (1+.12127)^3-1=40.972%.

This <b>is a hyperinlfationary environment.</b>

I don't believe that hyperinflation is happening in the US ex-food and energy. Adding food and energy is close, but still not at that level.



Hyperinflation takes longer than that, adadadog.
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And this is exactly what is repeating in the US at this exact moment. The banks are getting first use of newly printed money and buying assets with it. Since the velocity of money is below 1 there is a bottle neck in the banking system, which means banks are using the money to acquire assets that will rise in value during an inflationary environment rather than lending the money to borrowers. This is not necessarily an issue of banks intentionally withholding funds; it's an issue of soft demand on the part of businesses and consumers to borrow. You can't fix a problem that was caused by over-borrowing with more borrowing unless a sufficient amount of time has passed, which is generally measured in decades rather than years. Should a hyper-inflationary environment kick in now your scenario would most likely repeat exactly as you have laid your experience out. The middle class would be completely wiped out and we'd be looking at a country that resembled that of South Africa not so long ago but the pain would be more evenly distributed among racial classes rather than oppressing one particular racial class. The effects would be wide-spread devastation.

Quote from maler:

I lived through one hyperinflation.
The outcome was as follows.
The politically connected with
vast access to credit, (the hands that got
first use of the freshly printed money)
bought hard assets or productive economic entities
and made out like bandits.
The middle class was wiped out.
The dead beats had their debts forgiven.
There was nothing in it for me.
There will be nothing in it for me
if another one happens.
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Quote from freewilly:

DO not get scared to death when you hear the word "hyperinflation". I am asking a serious question, what is so wrong with that?

I was from China, and my parents still live there. The inflation in China from 1980 to now is at least 30X, yes, 3000%. I know that based on my first hand experience. It does not take a Economic Nobel prize winner to figure that out. I knew the prices back then, and I know the prices now. China just keeps printing, without telling anyone in the world. I can't say China living standard has gone downhill since 1980s. On the contrary, it is at least 10 times better now.
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Hyperinflation would not happen in the US because the government would not allow it.
 
Quote from the1:

Not sure I'm following your math. Isn't it a simple calculation as:

(1.3059)^30 = 3001.22, or 30.59% annualized compounded rate kicks 1 buck up to $3,001.22 bucks over 30 years? Still hyper-inflationary per your cite.
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(1+3000)^(1/30)-1=.3059, that's true, but 3,000 is not 3000%, 30 is, as 30*100=3,000%, 3,000*100=300,000% which is wrong.
 
My mistake. It's been a while since I've done TVM calc's but after a 2 min refresher I still disagree with your calculations. Correct me if you believe this is incorrect.

i = (FV/PV)^(1/n) -1
i = ((30/1)^(1/30)) -1
i = (30 ^ .0333) -1
i = 1.1199 -1
i = 12%, and therefore, not hyper-inflationary per your cite? If you disagree then we'll just agree to disagree to prevent the thread to turning into a debate on TVM calc's rather than the OP's topic.

Quote from bwolinsky:

(1+3000)^(1/30)-1=.3059, that's true, but 3,000 is not 3000%, 30 is, as 30*100=3,000%, 3,000*100=300,000% which is wrong.
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